Hague Convention Choice of Court Agreement and the Common Law 2007

UNIFORM LAW CONFERENCE OF CANADA

CIVIL SECTION

THE HAGUE CHOICE OF COURT CONVENTION AND THE COMMON LAW

by Vaughan Black, Dalhousie Law School

Readers are cautioned that the ideas or conclusions set forth in this paper, including any proposed statutory language and any comments or recommendations, may not have not been adopted by the Uniform Law Conference of Canada. They may not necessarily reflect the views of the Conference and its Delegates. Please consult the Resolutions on this topic as adopted by the Conference at the Annual meeting.

Charlottetown, Prince Edward Island, September 2007

I. Introduction

[1] The task of this report is to provide an assessment of the recently-concluded Hague Convention on Choice of Court Agreements[1] against the background of existing law on that subject in the common law provinces and the territories and also with respect to Canadian federal law. The report will offer a summary account of the Convention, a description of the ways in which it differs from existing law in common law Canada, some views on whether the scheme embodied in the Convention would represent an improvement on that existing law, and finally some recommendations as to whether the Convention should be adopted. With respect to this last matter it should be noted that (1) there is no other multilateral treaty on this subject under consideration, here or elsewhere, and (2) there are no other Canadian law reform projects under way that touch significantly on this area of the law. Accordingly, the choice to be made at this point would be whether to adopt the Convention (which would require implementing legislation at both the federal and provincial levels[2]) or to do nothing and stick with the present regime, which is made up of judge-made standards supplemented by statutory rules of court and a smattering of other legislated provisions. If the former option – adoption of the Convention – were selected, then some additional decisions would need to be made with respect to six optional parts of the Convention. Section V of this report will offer specific analysis and recommendations with respect to those.

[2] By way of foreshadowing this report’s conclusions at this introductory stage, I offer the following. First, the changes the Convention would bring to commercial and legal practice in Canada would not be great. This would be so even if it were adopted both here and in a number of other countries with which Canadian residents do business. This is so for two reasons: (1) the scope of the Convention is narrow (a fact which has generated some negative criticism from those who had hoped for a broader, more ambitious treaty on this subject[3]) and accordingly most commercial practices and legal questions would not be affected by it; and (2) even in those areas that would be covered by the Convention, the difference between the regime found in the Convention and that presently in place in the common law provinces of Canada is not great. Not only are the differences between the Convention and existing Canadian law slim, arguably they are getting slimmer. I make this observation based on the fact that in three recent cases where the Supreme Court of Canada has had the occasion to consider the Convention’s main goal – namely, reinforcing and augmenting the role of private autonomy over contractual dispute resolution – the Supreme Court has voiced strong support of that goal.[4] This was a trend that was identified by Professor Catherine Walsh almost a decade ago,[5] and it continues today. Thus, to the extent one can discern a general direction in which Canadian law on this subject seems to be moving, that direction would appear to be one in which the differences between existing law and the law found in the Convention are narrowing. In short, the Convention would not change a lot and accordingly the question of whether to adopt it, while hardly trivial, is not a matter of vital national interest.

[3] Secondly, there would seem to be hardly any down-side risk in adopting the Convention. There seems to be little to lose by implementing it, apart from the fact that doing so would take some time and effort to bring implementing legislation into force and the gains from doing so might not be perceived to reward even that modest expense.

[4] Thirdly, any gains to Canada and Canadians from the Convention will only accrue if the Convention is widely adopted in countries with which Canadian residents do business.

[5] Fourthly, one consideration in favour of adopting the Convention is a symbolic one – namely, that even if the Convention itself will not bring great change, its widespread adoption might signal the potential for future co-operation in the arena of international agreements dealing with court jurisdiction and foreign-judgment enforcement. Canadians almost certainly do stand to gain from broader, more encompassing multilateral agreements on judicial jurisdiction and cross-border judgment enforcement. The Convention is a stride in that direction, albeit not a large one. If it proves unsuccessful due to lack of widespread ratification, that does not bode well for further steps. But if it is adopted, while that adoption might not on its own bring great change or significant gains, it would act as a green light for further evolution in an arena that holds the potential for more tangible benefits to Canadians.

[6] As a brief addendum it should be noted that I know of no useful empirical studies in Canada (and few elsewhere) to back up any assertions about the Convention’s likely effects.[6] The Convention looks good on paper, but claims made about its supposed beneficial impact are based only on common sense assumptions about its likely effects. These assumptions are at best unquantifiable (that is, no dollar figure can be put on the estimated benefits to Canada from subscribing to the Convention), and at worst they may turn out to be wrong. Perhaps the most one can say about the claims for the Convention’s supposed benefits are that they rest on educated guesses about how it might affect future commercial behaviour. That these guesses can fairly be described as “educated” is due mainly to the perceived success of the highly-regarded 1958 New York Convention on Arbitral Awards.[7] That multilateral convention is generally viewed as a signal success. It is perceived as adding to the efficacy of international commercial arbitration and thus facilitating international commercial relations. The Convention under examination here is regarded as “the litigation counterpart of the New York Arbitration Convention”[8] To expand, the New York Convention encourages contracting parties to include arbitration clauses in their agreements by making sure that arbitral awards will be enforced internationally. No existing multilateral treaty does for contractual choice-of-court clauses what the New York Convention does for arbitration clauses. The Convention under consideration here seeks to fill that widely-acknowledged gap and the claims for its promised benefits are grounded on the supposition that it will parallel the success of the New York Convention.

[7] I conclude this opening part by drawing attention to one key premise that underpins my general conclusion that the Convention is a good (though modest) step. It is an assumption not often expressly acknowledged in legal analyses of documents like the Convention. It is this: one would only favour the Convention only if one supported increasing international commercial relations by increasing the efficiency by which those relations might be conducted. That goal, increased and more efficient international trade, while widely shared, is hardly uncontroversial. The Convention promises to be yet another aspect of legal change which aims to facilitate the internationalization of trade in goods and services, and those in favour of halting or even retarding the globalization of commercial relations would not be inclined to support it. Arguments about the pros and cons of commercial globalization are far beyond the scope of this report. I raise the issue here only to point out that my conclusion that the Convention is a good thing rests on certain assumptions about the value of international trade.

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